Making College Affordable? The Impacts of Tuition Freezes and Caps

• In Event: AERA Roundtable Session 11
  In Roundtable Session: Policy, Tuition, and Matters of Higher Education Finance

Abstract

We study how colleges' ``sticker price'' and institutional financial aid change during and after tuition caps and freezes using a modified event study design. While tuition regulations lower sticker prices, colleges recoup losses by lowering financial aid. At four-year colleges, regulations lower sticker price by 6.3 percentage points while simultaneously reducing aid by nearly twice as much (11.3 percentage points). Changes in net tuition vary widely; while some students receive discounts up to 5.9 percentage points, others pay 3.8 percentage points more than they would have without these regulations. Students who receive financial aid, enter college right after the regulation is lifted, or attend colleges that are more dependent on tuition benefit less.

Authors

• Lois Miller, University of Wisconsin - Madison

• Minseon Park, University of Wisconsin - Madison